Guidelines for Down Payment Assistance (Bond and Non …

Guidelines for Down Payment Assistance

(Bond and Non-Bond) and Mortgage

Credit Certificates

Revised: October 1, 2021

Texas State Affordable Housing Corporation 6701 Shirley Ave Austin, TX 78752

website: toll-free phone: 888-638-3555 social media: @TSAHC

TSAHC Program Guidelines for Homeownership Programs

Disclaimer: The Texas State Affordable Housing Corporation (TSAHC) provides these Program Guidelines (these "Guidelines") as a service to its participating lenders ("Lenders"). While TSAHC strives to make the information in these Guidelines as accurate as possible, we make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of these Guidelines. TSAHC expressly disclaims liability for errors and omissions in the contents of these Guidelines related to the eligibility and underwriting requirements of Lakeview Loan Servicing, LLC, Fannie Mae, Freddie Mac, FHA, USDA-RHS, and/or VA. For those requirements, Lenders should rely on their agreements with, and guidelines published by, the relevant entity.

Revisions Table.

Section

Page

Description of Revisions

Various 7.2

22-25

Revised to reflect Lakeview Loan Servicing, LLC ("Lakeview"), as master servicer for the Programs.

Clarified process for requesting rate lock extensions and fees for same

7.2

22-25 Post-Closing package due within five (5) calendar days of closing

5.1

19-20 FHA Manual Underwrite ? 640 FICO Minimum

2.1

5-8

Added active military to veteran definition in reference to Homes for Texas Heroes

2.3

9-10

Revised rental history requirement for first-time home buyers using MCC

2.5

10-11

Clarification of Texas resident requirement for the Homes for Texas Heroes program

5.2

20

Clarification of cosigner and non-occupying co-borrower requirements

7.1

22 Revised down payment assistance funding process

4.2, 5.1

14-17, 19-20

Addition of manufactured housing to eligible property types

2.3

9-10 Clarification for using TSAHC assistance multiple times

2.1, 2.3 2.6

3.3, 5.1, 7.2

5-8, 9-10

Clarified veteran definition in reference to waiving first-time home buyer requirement for Mortgage Credit Certificate

11

Revised completion by at least one borrower of home buyer education course

12-14, 19- Introducing TSAHC's new soft second lien down payment 20, 22-25 assistance

3.3

12-14 Clarified soft second lien repayment requirement

3.3

12-14 Revised MCC credit rate from 40% to 30%

3.4

14 Clarified usage of additional subsidy

3.3

12-14

Revised MCC credit rate from 30% to 20% and removed $2,000 max credit

Various

-

Added Bond DPA-related provisions

Various

-

Added HFA Preferred PLUS product including additional second lien options

Various

-

Clarified changes to the HFA Preferred PLUS product

Date 3/20/2017

3/30/2017 4/06/2017 4/19/2017 1/15/2018

1/15/2018

1/15/2018

1/15/2018 1/15/2018 5/01/2018 5/01/2018 5/01/2018

5/05/2018

8/20/2018 8/29/2018 2/04/2019 2/04/2019 2/27/2019 4/03/2019 4/03/2019 9/05/2019

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TSAHC Program Guidelines for Homeownership Programs

3.1

11-12

Added back the option to combine the MCC to the HFA Preferred Conventional DPA

2.3

9-10 Revised rental history requirement for first-time home buyers

Various 3.3, 5.1, 7.2

5.1

-

Eliminated TSAHC's grant and soft second lien for use with conventional loan types

12-14, 19- Introducing TSAHC's new 3-year Deferred Forgivable Second Lien 20, 22-25 for all loan types

19-20

Now accepting Freddie Mac HFA Advantage with LPA AUS up to 115% AMFI

5.1

19-20 Fannie Mae HFA Preferred Conventional limited to < 80% AMFI

5.2

20

Cosigners or non-occupying co-borrowers are now permitted on all government loans

5.2

20

Clarified cosigners or non-occupying co-borrowers are not permitted on conventional

2.3

9-10 Changed IRS printouts to read IRS transcripts

5.1

19-20

Now accepting Fannie Mae HFA Preferred Conventional up to 115% AMFI

In response to the COVID-19 pandemic, the following interim

5.1

19-20

guidance will be effective with all locks on or after May 4,2020, the minimum FICO score for FHA, VA and USDA products is 700 when

the DTI is >45%.

3.3

12-14 Clarified that the DPA is based on TOTAL loan amount

3.3

12-14 Clarified that a principal reduction is acceptable use of DPA

5.2

20

Clarified only occupying borrowers and non-purchasing spouses (NPS) may have an ownership interest in the subject property

7.2

24 Update to reservation extension fees

Removed the minimum 700 FICO score when the DTI is >45% for

5.1

19 FHA, VA and USDA products effective with new reservations April

29, 2021.

4.3

17

Eliminating purchase price limits for Non-Bond DPA when used by itself (no MCC).

9/05/2019 10/01/2019 11/29/2019 12/02/2019 12/02/2019 12/02/2019 12/02/2019 2/03/2020 2/03/2020 2/03/2020

5/04/2020

9/2/2020 9/2/2020 4/15/2021 4/15/2021 4/29/2021

10/01/2021

Revised 10.01.2021

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TSAHC Program Guidelines for Homeownership Programs

Table of Contents.

Revisions Table SECTION 1 - INTRODUCTION TO THE TSAHC HOMEOWNERSHIP PROGRAMS

1.1 General SECTION 2 ? MORTGAGOR ELIGIBILITY

2.1 Eligible Borrowers 2.2 Income Limitation 2.3 First-Time Home Buyer Requirement 2.4 New Mortgage Requirement/No Refinancing 2.5 Principal Residence Requirement 2.6 Residency Requirements 2.7 Home Buyer Education SECTION 3 ? LOAN ELIGIBILITY 3.1 Types of Loans 3.2 Purpose of Loan 3.3 Assistance Options ? Non-Bond DPA (with or without MCC), Bond DPA or MCC Only 3.4 Using Additional Subsidy Programs 3.5 Mortgage Subsidy Recapture Tax SECTION 4 ? PROPERTY ELIGIBILITY 4.1 Eligible Loan Area 4.2 Qualifying Residences and Mortgage Loans 4.3 Purchase Price Limitation 4.4 Targeted Areas SECTION 5 ? MORTGAGE LOAN UNDERWRITING AND PURCHASE 5.1 General Mortgage Underwriting 5.2 Cosigners and Non-Occupant Co-Borrowers SECTION 6 ? PROGRAM FEES AND CHARGES 6.1 Program Fees 6.2 Lender Compensation 6.3 Fees and Charges on the Closing Disclosure SECTION 7 ? LOAN RESERVATION, COMPLIANCE & FUNDING PROCEDURES 7.1 Lender Portal 7.2 Reservation, Compliance and Closing Steps 7.3 Electronic Submission of Required Documents SECTION 8 ? MODIFICATIONS 8.1 Changes in Current Income 8.2 Change in Purchase Price 8.3 Changes in Property Address 8.4 Change in Loan Amount 8.5 Lender's Obligation to Notify TSAHC of Material Changes SECTION 9 ? ADDITIONAL PROVISIONS 9.1 Cancellation and Commitment Expirations 9.2 Delinquent Closing Documentation 9.3 Penalties for Borrower Misrepresentation 9.4 Revocations of MCC 9.5 Reissued MCCs 9.6 Replacement MCCs SECTION 10 ? MCC REPORTING 10.1 Lender Record Keeping and Federal Report Filing 10.2 TSAHC Reports APPENDIX: INCOME GUIDELINES FOR BORROWERS RECEIVING BOND DPA OR MCCs

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TSAHC Program Guidelines for Homeownership Programs

Section 1 - Introduction to the TSAHC Homeownership Programs.

1.1 General

The Texas State Affordable Housing Corporation (TSAHC) provides (1) fixed-rate mortgage loans with down payment assistance (DPA) to qualified mortgagors, and (2) mortgage credit certificates (MCCs) to qualified mortgagors.

The DPA is provided from two different sources: (i) "Non-Bond DPA" which is financed through non-bond, market sales of mortgage-backed securities backed by the loans, and (ii) "Bond DPA" which is provided from the proceeds of tax-exempt single family mortgage revenue bonds issued under Section 143 of the Internal Revenue Code.

MCCs, which are issued under Section 25 of the Internal Revenue Code, provide a tax credit to the borrower based on the amount of the loan interest paid. MCCs may be issued with respect to (1) loans with Non-Bond DPA (but not Bond DPA) and (2) loans which are made by lenders which do not have Non-Bond or Bond DPA.

Non-Bond DPA, Bond DPA and MCCs are available to teachers, veterans, police officers, corrections officers, fire fighters, and low- to moderate-income home buyers through our Homes for Texas Heroes Program and Home Sweet Texas Loan Program (each a "Program" and together the "Programs").

TSAHC provides an online reservation and compliance system (Lender Portal) at where interest rates are locked and funds are reserved. TSAHC also provides these Program Guidelines (also referred to below as these "Guidelines") and applicable forms and affidavits, and reviews compliance packages to ensure TSAHC's eligibility requirements are met.

The Program Guidelines describe the current rules and requirements, outline the role of TSAHC, and set forth the requirements for Lenders to participate. TSAHC may revise the Program Guidelines from time to time. The most current version can be found on TSAHC's website at and on the Lender Portal at tsm-.

TSAHC's master servicer for loans with DPA is Lakeview Loan Servicing, LLC ("Lakeview"). All loans with Non-Bond DPA, whether with or without an MCC, and all loans with Bond DPA, will be sold to and serviced by Lakeview. Loans with DPA must also follow the Lakeview Selling Guide and product matrices found on tsm-.

Section 2? Mortgagor Eligibility.

2.1 Eligible Borrowers

A "Home Sweet Texas" eligible borrower is a person who at the time of loan application and loan closing has income no greater than the applicable maximum income for the Home Sweet Texas Program found on TSAHC's website at or the Lender Portal at .

A"Texas Hero"eligible borrower is a person who at the time of loan application and loan closing (i) has income no greater than the applicable maximum income for the Homes for Texas Heroes Program found on TSAHC's website at or the Lender Portal at tsm-online. org, and (ii) is employed full-time as a(n):

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TSAHC Program Guidelines for Homeownership Programs

Allied Health Faculty Member ? a full-time member of the faculty of an undergraduate or graduate allied health program of a public or private institution of higher education in the state.

Corrections Officer ? a full-time employee of the Texas Department of Criminal Justice (TDCJ) who receives hazardous duty pay.

County Jailer ? a person employed full-time as a county jail guard under Section 85.005, Local Government Code. County jailers are licensed through the Texas Commission on Law Enforcement (TCOLE).

Emergency Medical Services Personnel ? per Section 773.003, Health and Safety Code, emergency medical services personnel are full-time:

? emergency care attendants;

? emergency medical technicians;

? emergency medical technicians-intermediate;

? emergency medical technicians-paramedic; or

? licensed paramedics.

Fire Fighter ? a member of a fire department who performs a function listed in Section 419.021(3)(c), Government Code. Permanent, full-time fire department employees who are not secretaries, stenographers, clerks, budget analysts, or similar support staff persons or other administrative employees and who are assigned duties in one or more of the following categories:

? fire suppression;

? fire inspection;

? fire and arson investigation;

? marine firefighting;

? aircraft rescue and firefighting;

? fire training;

? fire education;

? fire administration; and

? any other position necessarily or customarily related to fire prevention or suppression.

Juvenile Corrections Officer ? a full-time employee of the Texas Juvenile Justice Department (TJJD) who receives hazardous duty pay. Juvenile corrections officers must have a VOE through TJJD.

Nursing Faculty Member ? a full-time member of the faculty of either an undergraduate or graduate professional nursing program.

Peace Officer ? a person elected, employed, or appointed as a full-time peace officer

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TSAHC Program Guidelines for Homeownership Programs

under Article 2.12, Code of Criminal Procedure; Section 51.212 or 51.214, Education Code; or other law. Peace officers are licensed through the Texas Commission on Law Enforcement (TCOLE).

Professional Educator ? a full-time, public K-12:

? classroom teacher,

? teacher aide,

? school librarian,

? school counselor, or

? school nurse.

Public Security Officer - a person employed or appointed full-time as an armed security officer by this state or a political subdivision of this state. The term does not include a security officer employed by a private security company that contracts with this state or a political subdivision of this state to provide security services for the entity. Public security officers are licensed through the Texas Commission on Law Enforcement (TCOLE).

Veteran ? a person who:

A. is serving on active duty, at the time of application, assigned to a military base or facility in Texas, and has officially designated Texas as the applicant's home of record. (note: this definition of "Veteran" is different from the definition of "Qualified Veteran" (see section 2.3 below) used to determine if the first-time home buyer requirement can be waived for Bond DPA or an MCC); or

B. meets each of the following 3 requirements:

1. meets at least one of the following:

ii. served not less than 90 days, unless sooner discharged by reason of a service-connected disability, on active duty in the Army, Navy, Air Force, Coast Guard, United States Public Health Service (as constituted under 42 U.S.C. Section 201 et seq.), or Marine Corps of the United States after September 16, 1940, and who on the date of filing an application under the program has not been dishonorably discharged from the branch of the service in which the person served; or

iii. has at least 20 years of active or reserve military service as computed when determining the person's eligibility to receive retired pay under applicable federal law; or

iv. has enlisted or received an appointment in the Texas National Guard, who has completed all initial active duty training required as a condition of the enlistment or appointment, and who on the date of filing the person's application has not been dishonorably discharged from the Texas National Guard; or

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TSAHC Program Guidelines for Homeownership Programs

v. served in the armed forces of the Republic of Vietnam between February 28, 1961 and May 7, 1975;

2. at the time of the person's enlistment, induction, commissioning, appointment, or drafting was a bona fide resident of this state or has resided in this state at least one year immediately before the date of filing an application under this chapter; and

3. at the time of the person's application under this chapter is a bona fide resident of this state. The term includes the unmarried surviving spouse of a veteran who died or who is identified as missing in action if the deceased or missing veteran meets the requirements of this section, with the exception that the deceased or missing veteran need not have served 90 days under Paragraph (A)(i) of this subdivision, and if the deceased or missing veteran was a bona fide resident of this state at the time of enlistment, induction, commissioning, appointment, or drafting.

2.2 Income Limitation

The income of the eligible borrower(s) must be less than or equal to the applicable Program maximum income limit. Note that the Program maximum income limits are significantly higher for homes located in Targeted Areas. The Maximum Family Income limits and the list of Targeted Areas are set forth on TSAHC's website at and the Lender Portal at tsm-.

For Non-Bond DPA (No MCC): For purposes of meeting the eligibility criteria, only the income of the mortgagor(s) will be considered. The income of a non-purchasing spouse (NPS) will not be included in the calculation. For example, only the income used to qualify the mortgagor for repayment of the mortgage loan (from the 1003 loan application and/or the applicable underwriting worksheet) will be compared against the program limits.

For Non-Bond DPA (with MCC), Bond DPA or MCC Only: For purposes of meeting the income eligibility criteria, income from all family members living in the home with an ownership interest is considered. Family income is calculated by taking the borrower's current gross monthly income from all sources, as well as that of anyone else who is expected to live in the residence and become liable on the deed of trust (including a non-purchasing spouse) and multiplying that amount by 12.

The Lender uses one of two methods of computation depending on whether the borrower is employed or self-employed. Generally, family income for an employed person is computed by multiplying the current gross monthly income figure by twelve. Sporadic income should be averaged and added to that base figure for a total. Family income for a self-employed person is computed by annualizing the year-to-date total on a current profit and loss statement and averaging that amount with the net income figures from the two most recent years' federal income tax returns (with depreciation added back in).

A. Sources of Income. The IRS requires that every source of income, taxed or untaxed, be included in the calculation of family income.

B. Prior Year Earnings. On some pay stubs the year-to-date earnings include pay from the

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